Council Working Group for the
Elaboration of the Draft Strategic Plan
and the Draft Financial Plan, 2008-2011
Document: WG-SP-FP-06/45
12 September 2006
English
6TH MEETING, GENEVA, 14 - 15 SEPTEMBER 2006
Argentine Republic
CONTRIBUTION OF SECTOR MEMBERS TO THE ITU BUDGET
I
Introduction
1
Six recent ITU plenipotentiary conferences (1982, 1989, 1992, 1994, 1998 and 2002) have
expressed concern about how to put the Union on a sounder financial footing, in order for the Union
to carry out more activities so as to meet its objectives in a shorter time-frame, without having to
abandon the current system of free choice of contributory class for Member States and Sector
Members.
2
A large number of administrations have repeatedly stated that this should be achieved through
an increase in the financial contribution of Sector Members, bearing in mind that, while Sector
Members make an important technical contribution, they also benefit from the outcomes of their
participation.
3
In sum, it should be remembered that it is the results achieved in:
–
ITU-T, in the form of recommendations containing technical, operating, tariff and economic
standards;
–
ITU-R, in the form of recommendations and reports and the adoption of regulatory
frameworks for the allocation of frequency bands to the various fixed, mobile and space
services to ensure intensive and efficient use of the radio-frequency spectrum and orbital
positions for satellite networks;
–
ITU-D, in the form of recommendations and studies for the development of
telecommunication projects,
which help Sector Members make timely and informed decisions on industrial, technology and
commercial issues and identify investment opportunities in development projects.
4
With the World Telecommunication Policy Forum (WTPF), ITU created a new mechanism
through which the private sector could directly bring to the attention of the public sector its needs in
terms of new services. Noteworthy in this regard are, for example, the signing of a Memorandum of
Understanding on GMPCS open to States and entities in the telecommunication sector, and the
analyses carried out within this framework on the General Agreement on Trade in Services (GATS)
of the World Trade Organization (WTO).
5
Over time, the Member States have been adopting decisions that strengthen Sector Member
partnership and involvement, for instance through their appointment as officers in conferences,
study groups, working parties, advisory groups and rapporteur groups, and through their
participation in the work of the ITU Council.
2
6
Through Sector Member participation, the bodies empowered to rule on policy, strategic
planning, operational plans and activities of the Union take into account the views and opinions
formulated by Sector Members within the three advisory groups (RAG, TSAG and TDAG), in
which the latter participate directly.
7
The progressive measures taken by Member States to grant Sector Members more rights and
greater involvement have not been accompanied by a commensurate increase in their latter's
financial contribution to support the functioning of the Union, despite the fact that such an increase
has been under consideration for the last 24 years (1982-2006) as described in section II below.
II
History of studies carried out in ITU with a view to increasing the financial
contribution of Sector Members
1
Resolution 52 (Nairobi, 1982): Sector Members were encouraged, through the
Secretary-General, to choose the highest possible contributory class in the light of the benefits they
derived.
2
Resolution 40 (Nice, 1989): As the above resolution had no positive effect, it was again
resolved to encourage Sector Members to choose the one-unit class as a minimum contribution,
provided their means are sufficient.
3
Period 1982-1994: All the efforts deployed to secure an increase in the number of Sector
Member contributory units were to no avail. While acknowledging the need to obtain funds from
the private sector, the Plenipotentiary Conference (Geneva, 1992) adopted no measures to that end,
with the result that the situation remained unchanged.
3.1 Among the comments heard at meetings at which this issue was addressed in order to explain
the lack of results, the following may be highlighted:
–
Sector Members would not be averse to increasing their contributions to ITU as long as they
were allowed to participate in budget decisions related to the allocation of funds and
expenditure oversight in respect of the three Sectors;
–
Sector Members wished to take part in the planning of Sector activities and Sector-related
structural affairs;
–
if Member States were to decide on an increase in Sector Member contributions, there would
be a risk that Sector Members would withdraw from the Union or continue participating
without being Sector Members, through their inclusion on official delegations of Member
States;
–
despite the acknowledged importance of Sector Member participation in ITU studies and
activities, they should view their contributions as an investment rather than an expense, given
the benefits they derived from that participation;
–
the imbalance between public and private sector contributions obliged the Member States to
subsidize activities of direct benefit to Sector Member business activities, and a solution
should be found for that problem without delay.
4
Resolution 39 (Kyoto, 1994): It was decided to examine options for strengthening the Union's
financial base. Resolution 15 (Kyoto, 1994): It was decided to review the rights and obligations of
Sector Members with the aim of enhancing their rights in recognition of their contribution to the
work of ITU.
5
Decision 471 (Council-96): The ITU-2000 Working Group was established, with a mandate to
continue the studies carried out by the Review Committee and the Secretary-General under
Resolutions 15 and 39 (Kyoto, 1994).
3
The ITU-2000 group recommended that the ITU budget system be improved in order to strengthen
the Union's financial base and to adequately meet the requirements of its membership
(recommendation 9), to which effect it further recommended that:
–
the free choice of financial contributions should be retained and Member States and Sector
Members should be encouraged to share in a more equitable manner the burden of financing
ITU activities, commensurate with the benefit they derive from the Union
(recommendation 9/1);
–
the Plenipotentiary Conference should examine the current ratio between the amount of the
contributory unit of Member States and that of Sector Members, in the light of the future
financial structure of the Union (recommendation 10).
6
Resolution 1112 (Council-97): The Council examined the ITU-2000 group's report and
adopted, among others, recommendations 9, 9/1 and 10 for transmission to the Plenipotentiary
Conference (Minneapolis, 1998) for consideration.
7
Resolution 90 (Minneapolis, 1998): The Plenipotentiary Conference considered the report of
the Chairman of the ITU-2000 group and the proposals and opinions expressed by Member States at
PP-98 with respect to the ITU-2000 recommendations, in particular recommendation 10 to the
effect that, within the context of the free-choice system, the current ratio between the amounts of
the contributory unit paid by Member States and Sector Members should be reviewed, in the light of
the future financial structure of the Union. It resolved: 1) that the need to retain current participants
in the activities of the Sectors of the Union and involve new participants should be taken into
account as an objective when pursuing the aims of recommendation 10 referred to above; 2) that the
review of the current ratio between the respective amounts of the contributory unit paid by Member
States and Sector Members should involve the participation of both categories of members. It
instructed the Council to review the contribution of Sector Members towards defraying the expenses
of the Union, on the basis of proposals made at PP-98 and any contributions submitted by Member
States and Sector Members, and invited Member States and Sector Members to participate in the
review.
8
Resolution 1132 (Council-99): The Council established the Working Group on ITU Reform
(WGR) pursuant to Resolution 74 (Minneapolis, 1998). WGR included Resolution 90 (Minneapolis,
1998) in its studies on reform, but no recommendation was forthcoming on the issue.
9
Resolution 110 (Marrakesh, 2002): PP-02 noted that WGR had not made any specific
recommendation concerning the 1/5 ratio between the amount of the Member State contributory
unit and that of the Sector Member contributory unit and that, while the number of Sector Members
had increased, under the system of free choice of classes of contribution the trend in choice of class
of contribution by individual Sector Members was towards a lower level. It recognized a) that it is
essential to retain and attract more Sector Members and Associates, having regard to their
inestimable contribution to the work of the Union and b) the need to broaden the financial base of
the Union and ensure a fair balance between the contributions made by Member States and Sector
Members. Accordingly, it resolved to invite the Council to establish an working group open to all
Member States and all Sector Members to study a system whereby Sector Members and Associates
contributed towards defraying the expenses of Union.
10 Report of the working group set up under Resolution 110 (Marrakesh, 2002): The working
group was set up to consider the system whereby Sector Members and Associates contribute
towards defraying the expenses of the Union. It submitted its report to Council-05 which took note
of the report and decided that it should be brought before PP-06.
The working group considered the three items set forth in Resolution 110 (Marrakesh, 2002),
namely:
4
a)
the method by which the amount of the contributory unit and of the financial contributions of
Sector Members and Associates should be determined;
b)
the appropriate proportion between the financial contributions of Sector Members and
Associates and those of Member States;
c)
the financial consequences of denunciation.
The working group reported that other issues relating to Sector Member contributions had been
identified which might need to be addressed in the future.
On the basis of the study carried out, several recommendations were drawn up, as listed below (R.1
to R.9). The texts below are extracts (the full text can be found in Council-05 Document C05/40):
2
Method by which the amount of the contributory unit and of the financial contributions
of Sector Members and Associates should be determined
2.1 Determination of the minimum level of contribution
R.1 The working group recommends that the minimum level of contribution of Sector
Members and Associates be determined by objective elements, i.e. cover the costs of their
participation in the work of the selected Sector or study group.
2.2 Should the system of free choice of the class of contribution be maintained?
R.2 The working group recommends keeping the free-choice system in order to maintain a
smooth and simple process.
2.3 Should the free-choice system be linked to a new predetermined level of contribution?
R.3 As stated above, the working group recommends that the minimum level of contribution
within the framework of the free-choice system should be linked to a predetermined minimum
level of contribution that allows the coverage of the costs of participation in a Sector or a
study group.
3
Appropriate ratio between Member State and Sector Member contributions
R.4 The working group did not make any progress in this regard and recommends
maintaining the status quo.
4
Financial consequences of denunciation
R.5 The working group recommends that the provisions in force regarding the financial
consequences of denunciation be reviewed.
R.6 Therefore, the working group recommends reducing the period of time stated in CV 240
and fixing it at six months (one financial quarter of a given two-year budgetary rolling
period).
5
Other issues
5.1 Consequences in case of structural change
5.2 Penalties in case of arrears
R.7 Consistent with a more reasonable notice period for denunciation (see § 4 above), the
working group recommends that the applicable time period for the imposition of sanctions
and penalties should also be accelerated.
5.3 Notification to Member States
5
R.8 The working group recommends that the sponsoring Member State, if applicable, be
copied on all correspondence concerning difficulties with a Sector Member/Associate that has
been sponsored by that Member State.
5.4 Reduction of the class of contribution between two plenipotentiary conferences
R.9 Although the trend by which most Sector Members select the minimum class of
contribution is not expected to change, there could be a benefit to adding new provisions in
the Convention in order to allow flexibility to Sector Members to decrease their contribution.
III Rules governing contributions to defraying the costs of the Union – Member
State contributions – Sector Member contributions – Comparative tables
a)
Rules governing the choice of class of contribution by Sector Members
The rule laid down in No. 468B of the Convention stipulates that:
–
to participate in the work of the Radiocommunication and Telecommunication
Standardization Sectors, the choice of contributory class lies between a floor level of 1/2 unit
and a ceiling of 40 units;
–
to participate in the work of the Telecommunication Development Sector, the choice of
contributory class lies between a floor level of 1/16 unit and a ceiling of 40 units.
b)
Rules for setting the value of the Sector Member contributory unit
No. 480 of the Convention provides that:
–
the amount of the contribution per unit payable towards the expenses of each Sector shall be
set at 1/5 of the contributory unit of the Member States.
c)
Rules for determining the amount of the contribution payable by Member States and
Sector Members
The amount of the contribution is determined on the basis of the number of contributory units
chosen by the members, on the basis of a free-choice system (No. 160 of the Constitution and
No. 480 of the Convention).
Biennial budget 2006-2007
The comparative tables below are drawn up on the basis of data from the biennial budget 2006-2007
contained in Document C05/100 – Resolution 1250 of Council-05 accessible via the ITU website.
6
TABLE I
Budget: 2007
Member States: 190
Value of the contributory unit for Member States
CHF 318 000
Number of Member State contributory units
342 5/8
Total income from Member States
CHF 108 915 000
Percentage of the total income from Member States and Sector Members,
i.e. CHF 128 699 000
84.63%
Percentage of total expenditure (2007 budget), i.e. CHF 168 048 000
64.81%
TABLE II
Budget: 2007
Sector Members: 652 (ITU-T: 354; ITU-R: 304; ITU-D: 334)
Value of the contributory unit for Sector Members
CHF 63 600
Number of Sector Member contributory units
321.95
Equivalent number of units (1/5 of the value of the Member State contributory
unit)
64.39
Total income from Sector Members
CHF 19 784 000
Percentage of the total income from Member States and Sector Members,
i.e. CHF 128 699 000
15.37%
Percentage of total expenditure (2007 budget), i.e. CHF 168 048 000
11.77%
TABLE III
Estimated expenditure by Sector for 2007
1
General Secretariat
88 663 000
2
Radiocommunication Sector
37 210 000
3
Telecommunication Standardization Sector
12 372 000
4
Telecommunication Development Sector
29 803 000
Total
CHF 168 048 000
IV Conclusions
1
The progressive measures taken by Member States to grant Sector Members more rights and
greater involvement have not been accompanied by a commensurate increase in the latter's financial
contribution to support the functioning of the Union, despite efforts having been made to secure
such an increase over the last 24 years (1982-2006) as described in section II above.
2
Given that this issue has been under consideration for such a long time, consuming the
Union's resources in the process, without any result in terms of modification of the situation which
7
we have been trying to change through dialogue with Sector Members, it would be appropriate for
Member States to analyse and conclude on this issue at PP-06, as follows:
2.1 Determine whether the current distribution of expenses between Member States and Sector
Members on the basis of the contributory amounts and percentages shown in Tables I and II in
section III above is equitable.
2.2 If Member States find that the answer to the above question is that the distribution of
contributions between Member States and Sector Members is indeed equitable, the issue could be
closed there, obviating the need to devote resources to further studies.
2.3 If Member States find that the answer to the above question is that the distribution of
contributions between Member States and Sector Members is not equitable, the issue could
similarly be closed by affirming this conclusion and taking a policy decision gradually to reduce the
large "financial gap" in the respective contributions, without jeopardizing the continued
participation of Sector Members in ITU.
3
If the plenipotentiaries are in favour of proceeding on the basis of § 2.3, the conference could
analyse the proposal set forth in section V below.
V
Proposal
1
Modify the rule (No. 480, Article 33 of the Convention) which stipulates that the amount of
the contribution per unit payable towards the expenses of each Sector (ITU-T, ITU-R, ITU-D) by
the Sector Member concerned shall be 1/5 of the contributory unit of Member States of the Union,
by replacing the latter value with a figure of 1/4 (see Annex I).
2
Delete Resolution 90 (Minneapolis, 1998): Review of the contribution of Sector Members
towards defraying the expenses of the International Telecommunication Union (see Annex III).
3
Delete Resolution 110 (Marrakesh, 2002): Review of the contribution of Sector Members
towards defraying the expenses of the International Telecommunication Union (see Annex IV).
4
Approve the draft resolution set forth in Annex II: Announcement of the new ratio for setting
the value of the Sector Member contributory unit.
VI Reasons
Partnership
The ITU Constitution contains provisions affirming that Member States and Sector Members act in
partnership for fulfilling ITU's objectives.
In this respect, reference may be made to Nos 8 and 16 in Article 1 (Purposes of the Union):
8
f)
to harmonize the actions of Member States and promote fruitful and constructive
cooperation and partnership between Member States and Sector Members in the
attainment of those ends;
16
f)
foster collaboration among Member States and Sector Members with a view to the
establishment of rates at levels as low as possible consistent with an efficient service
and taking into account the necessity for maintaining independent financial
administration of telecommunications on a sound basis;
8
Reference may also be made to No. 20 in Article 2 (Composition of the Union):
20
The International Telecommunication Union is an intergovernmental organization in
which Member States and Sector Members, having well-defined rights and
obligations, cooperate for the fulfilment of the purposes of the Union.
It will be of mutual benefit to consolidate this partnership by means of a more equitable
contribution towards the maintenance, operation and further development of work and studies
within the Union.
Driven by different and legitimate interests – for the former social within the public sector, and for
the other profit-making – Member States and Sector Members, who are already working in
partnership and coordination, could strengthen this understanding so as to jointly sustain the
organization through more balanced levels of contribution.
Change in the ratio from 1/5 to 1/4
The proposal to modify the ratio from 1/5 to 1/4 will alter the value of the Sector Member
contributory unit.
Applying the 1/5 ratio, on the basis of a Member State contributory unit amounting to
CHF 318 000, the value of the Sector Member contributory unit in the 2006-2007 budget comes to
CHF 63 600.
With a 1/4 ratio, on the same basis of CHF 318 000, the value of Sector Member contributory unit
as from the 2008-2009 budget would be CHF 79 500.
Impact of the change in ratio
The difference between the two values (CHF 79 500 and CHF 63 600) is CHF 15 900. In terms of
the actual amount paid by Sector Members, this figure of CHF 15 900 will be divided by two,
giving CHF 7 950, for all ITU-T and ITU-R Sector Members who, in the main, contribute in the 1/2
unit class.
In the case of ITU-D Sector Members, the majority of which contribute in the 1/8 and 1/16
contributory classes, the increase resulting from the change in ratio will have negligible impact.
We therefore believe that the increase in Sector Member contributions could be absorbed without
any risk of their denouncing their participation in ITU.
On the other hand, for ITU this increased contribution would be of great significance at a time when
more activities are being foreseen in the strategic plan, calling for more resources, remembering that
Member States have already ruled in the past and confirmed in the present that zero nominal growth
is to be maintained as the budgeting approach in ITU.
In this connection, the Administration of France submitted to Council-06 the report of the Chairman
of the Council Working Group for the Elaboration of the Draft Strategic Plan and Draft Financial
Plan 2008-2011 (Document C06/23), § 5.2 of which (“Ratio between Member State and Sector
Member contributions”) states as follows:
"According to CV480, the amount of the contribution per unit payable towards the expenses of each
Sector concerned shall be set at 1/5 of the contributory unit of Member States. This ratio was
introduced in 1982. The increasing role and participation of Sector Members in the work of the
Sectors should however call for a review of this ratio. An increase from 1/5 to ¼ is anticipated.
A similar increase is also assumed in setting the contributions from Associates. According to
9
CV483A, Associates shall share in defraying the expenses of each Sector concerned as determined
by the Council. The change from 1/5 to ¼ would represent an increase of income of
CHF 21.7 million."
Deletion of Resolution 90 (Minneapolis, 1998) and Resolution 110 (Marrakesh, 2002)
Given that studies with a view to securing a greater contribution on the part of Sector Members
have been going on for 24 years without any result, there is little point continuing this work, and
allocating economic resources to it; rather, it would be advisable to take a final decision on the
matter.
Draft resolution
It is necessary for the Sector Members to be informed of the change in the ratio. At the same time,
an ongoing campaign needs to be conducted to gradually increase the participation of new Sector
Members in the work of the ITU Sectors, monitoring new members and denunciations so as to take
the necessary action, as appropriate.
10
ANNEX I
CONVENTION OF THE INTERNATIONAL
TELECOMMUNICATION UNION
CHAPTER IV
Other Provisions
ARTICLE 33 (CV)
Finances
ARG/35/2
MOD
480
PP-94
PP-98
5
The amount of the contribution per unit payable towards the expenses of
each Sector concerned shall be set at 1/4 of the contributory unit of the
Member States. These contributions shall be considered as Union income.
They shall bear interest in accordance with the provisions of No. 474 above.
11
ANNEX II
ARG/35/3
ADD
DRAFT RESOLUTION [ARG-2]
New ratio for setting the value of the Sector Member contributory unit and
measures to increase the number of Sector Members and Associates
The Plenipotentiary Conference of the International Telecommunication Union (Antalya, 2006),
taking into account
the amendment made to No. 480 of the ITU Convention, modifying the ratio for setting the value of
the Sector Member contributory unit from 1/5 to 1/4 of the Member State contributory unit,
considering
a)
the decision taken to apply the new ratio of 1/4 with effect from the 2008-2009 biennial
budget;
b)
that all Sector Members must be informed of the new ratio,
resolves to instruct the Secretary-General
1
to notify Sector Members sufficiently in advance of the new ratio together with the relevant
budget information, so that they can decide on, and inform the General Secretariat about, the
contributory class they select for their contribution towards defraying ITU expenses as of the
2008-2009 budget;
2
to keep Sector Members informed about the level of contribution chosen by each of them, and
encourage them to increase their contribution;
3
to elicit and coordinate the participation of the Directors of the Telecommunication
Standardization (TSB), Radiocommunication (BR) and Telecommunication Development (BDT)
Bureaux in implementing resolves to instruct the Secretary-General 2 above;
4
to report annually to the Council on the results obtained from the measures taken pursuant to
resolves to instruct the Secretary-General 2, on movements in terms of new members and
denunciations, and on any initiatives implemented with a view to increasing Sector Member
contributions,
instructs the Directors of the Telecommunication Standardization, Radiocommunication and
Telecommunication Development Bureaux
to collaborate with the Secretary-General in work aimed at Sector Members with a view to
increasing Sector Member contributions,
instructs the Council
to establish, on the basis of the information received from the Secretary-General, lines of action to
be implemented jointly by the Secretary-General and the Directors of TSB, BR and BDT to attract
new Sector Members and Associates to join and participate in the three Sectors of the Union.
12
ANNEX III
Background
Through Resolution 90 (Minneapolis, 1998), Member States decided to continue pursuing efforts to
increase income in the Union budget through a greater contribution by Sector Members, instructing
the Council to carry out a study to this end, in which both Member States and Sector Members were
entitled to participate.
Results
The Council decided that this study should be added to those entrusted to the Working Group on
ITU Reform which, in completing its work, did not however put forward any recommendation on
this issue. This was the situation reported to the Plenipotentiary Conference (Marrakesh, 2002).
The Plenipotentiary Conference (Marrakesh, 2002) took the issue up again and adopted
Resolution 110 (Marrakesh, 2002) entitled “Review of the contribution of Sector Members towards
defraying the expenses of the International Telecommunication Union”. In so doing, it nonetheless
maintained Resolution 90 (Minneapolis, 1998).
Proposal
It is proposed that Resolution 90 (Minneapolis, 1998) be deleted.
ARG/35/4
SUP
RESOLUTION 90 (Minneapolis, 1998)
Review of the contribution of Sector Members towards defraying
the expenses of the International Telecommunication Union
Reasons: The issue addressed in Resolution 90 (Minneapolis, 1998) was picked up in the content
of Resolution 110 (Marrakesh, 2002), with the result that there are no grounds to keep it in force,
and it should be deleted.
13
ANNEX IV
Background
The Plenipotentiary Conference (Marrakesh, 2002), noting the information from the Council to the
effect that no recommendations had been made in relation to the studies initiated under
Resolution 90 (Minneapolis, 1998), decided that efforts to increase income in the Union budget
through an increased Sector Member contribution should be pursued, and thus again entrusted the
Council to carry out a study to this end, in which both Member States and Sector Members were
entitled to participate.
Results
The Council set up a working group to address the issue. The working group recommended that the
level of the Sector Member contribution be maintained unchanged.
Proposal
It is proposed that Resolution 110 (Marrakesh, 2002) be deleted.
ARG/35/5
SUP
RESOLUTION 110 (Marrakesh, 2002)
Review of the contribution of Sector Members towards defraying
the expenses of the International Telecommunication Union
Reasons: Over a period of 24 years, various working groups have been set up to study the issue of
Sector Member contributions, to no avail. There seems to be no point in continuing to set up further
working groups on this subject, which will consume economic resources.
It is recommended that Resolution 110 (Marrakesh, 2002) be deleted, in the light of the proposal
submitted that Member States should take a final decision on this matter.
____________